Merkel Shifts Focus to Economy From Debt as State Election Nears

Jan. 5 (Bloomberg) -- German Chancellor Angela Merkel said
she’ll make jobs and growth a priority in this election year, in
comments that indicate a shift away from focus on the European
debt crisis.

“For us it’s clear that’s what economic competence and
keeping up Germany’s wealth means,” Merkel said at a meeting of
her Christian Democrats today in the North Sea port of
Wilhelmshaven. High-quality jobs with fair pay will be the
priority, said the Chancellor, who’s seeking a third term in
September elections.

The speech is the first of seven by Merkel in Lower Saxony
which holds state elections on Jan. 20. In a 12-page declaration
agreed to at the talks, Merkel’s CDU makes scant reference to
the debt crisis other than pledging sound budgets and vowing to
keep Germany out of any debt union with its euro bloc partners
that might entail joint bonds or pooled debt.

As Europe’s biggest economy slows, a recovery in euro-area
bond markets may help broaden voter support for Merkel. The
markets “have calmed” Finance Minister Wolfgang Schaeuble said
yesterday at a rally near Wilhelmshaven. He was alluding to a
pledge by the European Central Bank to widen euro-area bond
buying if necessary and vows by member states including Greece
to deliver on austerity commitments.

Germany’s economic outlook has dimmed at the start of 2013
and Europe’s sovereign debt crisis is “far from over,” Merkel
said in an address on German television on Dec. 31. “The
reforms that we’ve agreed on are starting to take effect.
Nevertheless, we still need a lot of patience.”

Job Creation

With the CDU and the main opposition Social Democrats
espousing similar policies to solve the debt crisis, Merkel will
likely focus on creating jobs to distinguish her policies from
rivals, Deutsche Bank Research said in a note yesterday.

Just like Merkel’s national government, her CDU in Lower
Saxony is seeking to stay in power with its Free Democratic
Party coalition partner. The region is home to Volkswagen AG and
is Germany’s second largest state by territory.

Led by incumbent Prime Minister David McAllister, the CDU
polled 40 percent to the opposition SPD’s 34 percent in an
Infratest survey released Jan. 3. McAllister’s FDP allies, who
hold a national convention in Stuttgart tomorrow, polled 4
percent, which wouldn’t be enough to win any seats in parliament
given Germany’s election threshold of 5 percent.